"We're coming up on Year 15 — since MSHDA says every applicant waives the Qualified Contract right just by applying, is there any exit before Year 30, and what actually changes about MSHDA's oversight once we're into the extended-use tail?"
The compliance/extended-use math: Michigan's own QAP puts the floor at 30 years
The federal baseline is the same everywhere: a 15-year Compliance Period under 26 U.S.C. §42(i)(1), and a Qualified Contract right under §42(h)(6)(E) that, if exercised and not satisfied, can let an owner exit the Extended Use Period as early as the end of that 15th year. Michigan's QAP closes that exit before it can ever open. Exhibit I, Section XVI states the rule without qualification: "By submitting an application for LIHTCs, all Applicants waive the right to request a qualified contract under Section 42(h)(6)(E)(i) of the Internal Revenue Code. Thus, MSHDA's required extended use commitment shall not terminate at the end of the compliance period but is instead a minimum of 30 years." That is a direct, MSHDA-drafted statement of a 30-year floor — 15 years compliance plus 15 years minimum extended use — not an inference from silence, and it directly confirms this research's instruction to verify Michigan's actual figure rather than assume the cross-state 55-year default.
The mechanism is unusually blunt compared to other states this guide has covered. Georgia, for instance, requires a waiver written into each project's recorded Declaration under a specific threshold section, and keeps a live fee schedule for whatever part of its older portfolio predates that mandatory waiver. Michigan's QAP text does not describe a separate waiver document, a Declaration provision, or a look-back date at all — it states that the act of submitting an application is itself the waiver. This research could not confirm from the current QAP alone whether that same waiver-by-application language governed Michigan awards made under prior years' QAPs before this specific clause existed; that would need to be checked against each award year's own QAP text rather than assumed to have always applied.
Affordability Commitment: the only route past 30 years, worth up to 5 points at 0.34 per year
The Scoring Criteria's Development Characteristics category, item 4 ("Affordability Commitment"), is Michigan's sole scored path to a longer restriction. Its own text: "Projects that agree to commit to an extended use period longer than 15 years (i.e., beyond the minimum total commitment of 15 years compliance plus 15 years extended use = 30 years) will receive 0.34 points for each additional year, up to a maximum of 5 points. Fractional points will be rounded down. Thus, a project committing to a total affordability period of 45 years would earn the maximum 5 points." The worksheet spells out the arithmetic as a fill-in-the-blank: 15 years Compliance Period, plus 15 years IRS-required Extended Use Period, plus however many "Additionally Committed Years" the applicant writes in, equals the Total Affordability Commitment.
| Component | Years |
|---|---|
| Compliance Period | 15 Years |
| plus: IRS Required "Extended Use Period" | 15 Years |
| plus: Additionally Committed Years | (applicant enters this) |
| equals: Total Affordability Commitment | 30 Years minimum — 45 Years earns the maximum 5 points |
0.34 points per additional year, rounded down; the 5-point cap is reached at 45 total years (15 additional years × 0.34 ≈ 5.1, rounded down to the 5-point maximum).
Two things are worth being precise about here. First, the carve-out: "Projects using a TIF structure are not eligible for these points" — stated flatly, immediately after the worksheet, with no partial-eligibility or phase-in language. Second, what the QAP does not say: nothing in the current text caps how many years a project may voluntarily commit to, only that additional points stop accruing once the total reaches 45 years. A project is free to write in more than 15 additional years on the worksheet; it simply will not be scored for any of the years past the 45-year mark. That is a different, more limited claim than Georgia's compliance manual makes when it says a specific LURC can run "often longer" than the state's own floor on a case-by-case basis — this research found no equivalent case-by-case discussion in Michigan's QAP, only the scored worksheet itself.
Compliance monitoring: a one-time 15-year fee, a small annual fee after that, and inspections that the QAP says continue without saying they change
Section XVII states the compliance fee precisely: "All units must pay the sum of $525 per low-income unit. Such amount will cover the initial 15-year compliance monitoring period and is payable prior to the issuance of Form 8609. Also, a fee of $25 per LIHTC unit will be charged annually during the extended use period." That is a single, one-time $525-per-unit payment due before 8609 issuance that is meant to fund MSHDA's entire 15-year initial compliance-monitoring workload, followed by a materially smaller $25-per-unit annual charge for as long as the extended-use period actually runs — 30, 45, or whatever total a given LURA specifies.
| Fee | Amount | When |
|---|---|---|
| Credit Compliance Monitoring Fee | $525 per low-income unit | One-time, due before Form 8609 issuance; covers the full 15-year initial Compliance Period |
| Extended Use Period compliance fee | $25 per LIHTC unit | Annually, for the entire Extended Use Period |
| Noncompliance fee | $50 per unit | For significant and repeated noncompliance issues |
| Missed-inspection/file-audit fee | Sliding scale (see Fee Schedule Policy Bulletin) | When an owner fails to have a representative present for a scheduled inspection or file audit |
| Exchange of Credit fee | 5% of the annual LIHTC award (10% for a second exchange) | When an owner returns and MSHDA reissues an allocation without competing |
The QAP itself states compliance fees are "subject to change based on changes in costs" of administering compliance monitoring or new MSHDA/IRS requirements — treat the amounts above as current-QAP figures, not a permanently fixed schedule.
Exhibit VI sets the actual monitoring regime: MSHDA, or its authorized agent, physically inspects all buildings and common areas plus at least 20% of the low-income units, and audits tenant files for the same 20% sample, with inspections and audits commencing no later than the end of the second calendar year after the last building is placed in service and recurring "at least once every 3 years thereafter throughout the initial 15 year compliance period." The very next sentence is the one worth flagging carefully: "MSHDA will continue to conduct physical inspections and file audits throughout the extended use period." Unlike some other states this guide has covered — Georgia's compliance manual, for example, explicitly steps inspection frequency down to every 3-5 years and often to a "windshield" exterior-only review after Year 15 — Michigan's QAP text states only that inspections continue, without stating a different cadence, sample size, or inspection type for the extended-use years. MSHDA also "retains the right to perform an on-site inspection and/or file audit of any low-income building at any time or frequency during the initial compliance period and the remainder of the extended use period," which reads as a reservation of authority rather than a description of the routine post-Year-15 cadence. Whether MSHDA's separate LIHTC Compliance Manual (referenced by the QAP but not reproduced in it) actually specifies a reduced extended-use cadence is something this research could not confirm and that should be checked directly against that Manual rather than assumed either way.
Two further mechanics carry through unchanged from the compliance period into the extended-use tail: the annual Owner Certification of Continuing Program Compliance and the ongoing electronic tenant-data reporting obligation are both stated as standing owner responsibilities with no stated sunset at Year 15, and record retention runs long past it — first-year records must be kept for "six years after the due date (with extensions) for filing the federal income tax return for the last year of the compliance period (a total of 21 years)," with each subsequent year's records held for six years past that year's own return due date. The noncompliance-cure and Form 8823 mechanics (a minimum 30-day cure period, extendable up to six months for good cause, with Form 8823 filed no later than 45 days after the correction period ends) are stated as general Compliance Manual/Exhibit VI procedures, not as provisions limited to the initial 15-year period — though whether Form 8823 filings continue to matter once a building is out of its federal compliance period is a question of IRS practice rather than something the Michigan QAP itself addresses.
Property tax: a statutory as-of-right exemption that can outlast the LURA, plus a separate scored Tax Abatement route
MCL 125.1415a — Section 15a of the State Housing Development Authority Act of 1966, 1966 PA 346 — gives an eligible housing project a genuine, if conditional, escape from ordinary ad valorem property taxes. The exemption reaches a housing project "owned by a nonprofit housing corporation, consumer housing cooperative, limited dividend housing corporation, mobile home park corporation, or mobile home park association that is financed with a federally-aided or authority-aided mortgage or advance or grant from the authority" — language that covers most MSHDA-financed LIHTC ownership structures, since MSHDA LIHTC deals are routinely organized as Limited Dividend Housing Associations. It is not automatic on eligibility alone: the owner must first get MSHDA to certify the project's eligibility on an affidavit, then file that certified notification with the local assessing officer before November 1 of the year preceding the first exempt tax year. In exchange for the exemption, the owner pays the municipality an annual service charge in lieu of taxes — for new construction, the greater of the property's pre-construction-year tax bill or 10% of annual shelter rents; for rehabilitation, the lesser of the two — and a municipality may adjust that service charge by ordinance (though never above what full taxes would have been), or opt the exemption out entirely for all or a class of housing projects within its boundaries.
The exemption's duration is a genuinely separate clock from the LURA's extended-use term, and can run longer: it lasts "for as long as the federally-aided or authority-aided mortgage or advance or grant from the authority is outstanding, but not more than 50 years," unless the municipality sets a different period by its own ordinance. A 50-year statutory ceiling tied to an underlying mortgage balance is not the same clock as a 30- or 45-year LURA extended-use commitment — a project's tax treatment and its affordability restriction can, and often will, run on different schedules entirely. The state provides no backfill for the lost local revenue: "This state shall not reimburse any unit of government for a tax exemption granted to any housing project under this section."
That statutory exemption is distinct from the QAP's own scored Tax Abatement item (Development Characteristics, item 12, worth up to 3 points), which requires the abatement to be "in place and effective for longer than the 15-year compliance period" and documented through one of several pathways depending on the project's location — an area-wide municipal ordinance, a project-specific ordinance where no area-wide one exists, a tribal-trust-land cooperation agreement, or, for a project using Housing Tax Increment Financing, the approved Brownfield TIF package under MSHDA's Housing TIF Program Statement Addendum II, with proof the TIF will run at least the minimum extended-use period. That last pathway creates a real trade-off worth naming explicitly: the same paragraph states "projects utilizing a TIF structure will not be eligible for Affordability Commitment points" — so a Michigan applicant financing through Housing TIF can pick up Tax Abatement points but forecloses the separate Affordability Commitment points covered above; the two scoring items are not simultaneously available to a TIF-structured deal.
A brand-new state credit is about to stack onto some of these deals — with no compliance track record yet
Michigan's state tax credit is not called "MIHP" — no such program exists. The real program is the Housing Opportunity Tax Credit (HOTC), enacted as 2026 Senate Bill 966 and signed into law as Public Act 23 of 2026, effective July 21, 2026. MSHDA administers it: a nonrefundable credit against the state's personal and corporate income taxes and the insurance premiums tax, available for tax years beginning on or after January 1, 2027, targeted at qualified low-income housing projects that have received 4% federal LIHTC. The base annual amount available for the 2027 award cycle is $42 million, adjusted for inflation using the Consumer Price Index in subsequent cycles, with statutory set-asides of not less than 25% for new construction "4% qualified projects," not less than 25% for preservation "4% qualified projects," and up to 50% for any qualified project at MSHDA's discretion.
HOTC is worth flagging here rather than treating as settled compliance infrastructure. Governor Whitmer approved the currently effective 2026-2027 QAP on July 9, 2025 — more than a year before HOTC became law — so the QAP text this research reviewed contains no HOTC-specific compliance, recapture, monitoring-fee, or extended-use provisions at all; a full-text search of both the QAP and Scoring Criteria for "Housing Opportunity" and "HOTC" returned nothing. A developer layering HOTC onto a 4% deal for the 2027 award cycle or later should expect to find the program's compliance and Year-15-adjacent rules in a dedicated MSHDA HOTC program document or a future QAP amendment, not in the current QAP analyzed for this guide.
Where this goes wrong
- Assuming Michigan's extended-use term runs 55 years because that's this cross-state guide's default phase framing. MSHDA's own QAP text (Exhibit I §XVI) states the floor directly as a minimum of 30 years — 15 years compliance plus 15 years extended use — not 55.
- Assuming a Michigan LIHTC project can pursue a Qualified Contract at Year 15 the way 26 U.S.C. §42(h)(6)(E) contemplates by default. The QAP treats the act of submitting an LIHTC application itself as the waiver of that right for every Applicant and every credit type — there is no separate opt-in/opt-out document or look-back date to check for the way some other states structure it.
- Assuming voluntary affordability extensions keep earning points indefinitely, or that 45 years is a hard ceiling on how long a project may commit. The Affordability Commitment item's scoring caps at 45 total years (0.34 points/year beyond 30, maximum 5 points, rounded down) — the QAP does not state that a project is barred from voluntarily committing beyond 45 years, only that additional years past that point earn no further points.
- Using a Housing Tax Increment Financing structure while also expecting Affordability Commitment points. The QAP explicitly disqualifies TIF-financed projects from those points, even though the same TIF structure can separately qualify a project for the Tax Abatement scoring item — the two are not simultaneously available on a TIF deal.
- Assuming inspection frequency or scope loosens after Year 15 the way it does under some other states' compliance manuals. Michigan's QAP text says only that MSHDA "will continue" physical inspections and file audits through the extended-use period, without stating a reduced cadence, smaller sample, or exterior-only inspection type — verify the actual post-Year-15 practice directly against MSHDA's separate LIHTC Compliance Manual rather than assuming a step-down.
- Treating the $25/unit/year extended-use compliance fee as the only ongoing cost of the tail. A $50/unit noncompliance fee, a sliding-scale missed-inspection fee, and (for HOME-funded or otherwise layered deals) additional program-specific charges can all apply on top of it, and the QAP reserves MSHDA's right to change compliance fees based on its own administrative costs.
- Assuming MCL 125.1415a's property-tax exemption is automatic simply because a project carries LIHTC restrictions. It requires MSHDA certification of eligibility, a filed affidavit with the local assessing officer before November 1 of the preceding tax year, and remains subject to a municipality's own ordinance-based opt-out for all or a class of housing projects — and it is a legally distinct mechanism from the QAP's own scored Tax Abatement item, with its own service-charge formula and its own duration (up to 50 years, tied to the underlying mortgage, not to the LURA's extended-use term).
- Assuming the new Housing Opportunity Tax Credit is already reflected in current MSHDA compliance or extended-use procedures. Public Act 23 of 2026 was signed more than a year after Governor Whitmer approved the currently effective 2026-2027 QAP, and neither the QAP nor its Scoring Criteria mentions HOTC anywhere.
- Referring to Michigan's state tax credit program as "MIHP." No such program exists; the real, MSHDA-administered state credit is the Housing Opportunity Tax Credit (HOTC) under 2026 PA 23.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies